The objective of this study is to investigate the contribution of MSEs in localrneconomic development in Mekelle urban local government, Tigray regionalrnstate. Sample was taken from 486 metal and wood work MSEs whichrnhave been registered by Mekelle town trade and industry office. 102 micrornand small enterprises (MSEs) were selected randomly by considering theirrnyear of establishment and type of ownership (68 individually owned andrn34 cooperative enterprises). In the study various local economicrndevelopment indicators like employment creation, income generation, localrninput and market linkage, taxation and contribution to local communityrndevelopment were assessed. It has also assessed the characteristics of thernenterprises and the constraints that faced the enterprises duringrnoperation.rnThe study employed different methods of data collection instruments, arnquestionnaire survey covering a total of 102 sample enterprises werernconducted in the town. Besides, focus group discussion and interviewsrnwith MSE operators as well as the support office experts have undertaken.rnThe findings of the study found out that the majority of metal and woodrnMSEs in the study area engaged due to background skills and experience.rnThe sources of finance for the start-up were their personal savings. Withrnregard to the contribution of the MSEs to local economic development, thernstudy found out that the enterprises are contributing a lot in terms of jobrncreation, re-investment of their profits, utilize inputs from local suppliers,rnproduce for local market, generating income (tax) to local government andrncontribute to the local community by raising money for roads, educationrnand health.rnThe survey also revealed many constraints to the MSE, such as limitedrnaccess to finance (loan), work premises, less availability of market, lowrnentrepreneurial and technical capacity and low follow up and supportrnservices which all together have negative influence to the development ofrnthe enterprises.